Correlation Between DIeteren Group and Penske Automotive

Can any of the company-specific risk be diversified away by investing in both DIeteren Group and Penske Automotive at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining DIeteren Group and Penske Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DIeteren Group SA and Penske Automotive Group, you can compare the effects of market volatilities on DIeteren Group and Penske Automotive and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in DIeteren Group with a short position of Penske Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of DIeteren Group and Penske Automotive.

Diversification Opportunities for DIeteren Group and Penske Automotive

0.51

Correlation Coefficient

DIeteren Group  Penske Automotive

Very weak diversification

The 3 months correlation between DIeteren and Penske is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding DIeteren Group SA and Penske Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penske Automotive and DIeteren Group is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on DIeteren Group SA are associated (or correlated) with Penske Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penske Automotive has no effect on the direction of DIeteren Group i.e., DIeteren Group and Penske Automotive go up and down completely randomly.

Pair Corralation between DIeteren Group and Penske Automotive

Assuming the 90 days trading horizon DIeteren Group SA is expected to generate 1.57 times more return on investment than Penske Automotive. However, DIeteren Group is 1.57 times more volatile than Penske Automotive Group. It trades about 0.08 of its potential returns per unit of risk. Penske Automotive Group is currently generating about 0.05 per unit of risk. If you would invest  12,599  in DIeteren Group SA on September 22, 2024 and sell it today you would earn a total of  3,391  from holding DIeteren Group SA or generate 26.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

DIeteren Group SA  vs.  Penske Automotive Group

DIeteren Group SA

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DIeteren Group SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, DIeteren Group reported solid returns over the last few months and may actually be approaching a breakup point.

Penske Automotive

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Penske Automotive Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Penske Automotive may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with DIeteren Group and Penske Automotive

The main advantage of trading using opposite DIeteren Group and Penske Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DIeteren Group position performs unexpectedly, Penske Automotive can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Penske Automotive will offset losses from the drop in Penske Automotive's long position.

The idea behind DIeteren Group SA and Penske Automotive Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.